Ssshh! Don't tell anyone. Fixed rates are nearly at historic lows seen last November. And nobody seems to care!
Quietly, oh so quietly, fixed rate mortgages have dropped to levels not seen since the heady days last fall when lenders were absolutely crushed with loan applications. What's going on, anyway? Wasn't everyone talking about Greenspan raising rates May 7th?
Now, the bets are off. Just a few short weeks ago many predicted that the Feds would raise rates at their May meetings and again in June. But now that's changed and most expect no changes at all. While Greenspan has little to do with fixed mortgage rates, the Fed's actions are seen as an indicator of the current economic climate. If the economy gets too hot, expect the Fed to lower short term rates to slow growth and stave off inflation. Too cold and the opposite holds true, lower rates to jump start the economy.
Your local pundits and talking heads as recently as February were talking about how mild this past recession was compared to others and what a great job Greenspan did in keeping the economy out of the tank. The Dow Jones Industrial Average was comfortably above 11,000 and all systems were “go” for another stock market rally. But things didn't turn out exactly as planned.
It seems that the Enron debacle showed how creative companies can been at making up profits or hiding losses. The public soon discovered that Enron wasn't the only one trying to prop up its P&L. Others followed suit by revising past earnings and future estimates. Trouble overseas, oil embargos and general International unrest are before us. And those talking heads touting stocks? Now they routinely state whether or not they own a stock or have ever had a relationship with a company when making calls to “buy” or “sell.”
When accountants, fund managers and financial planners have difficulty in reading the balance sheets of corporate America then what must the general public think? Apparently not much, as the stock market is testing lows not seen for quite some time. All this uncertainty typically means more money leaving stocks and into fixed instruments like mortgage bonds, driving up the price and lowering rates.
But where's all the press? Why aren't we hearing about it in the newspapers? Has the story of low interest rates simply run out of ink? Are we tired of hearing about it? Maybe we are, maybe we're not. But for those of you who are waiting for one last chance to refinance your current mortgage . . . run, don't walk to your mortgage company. It might really, really be the last low rates for quite some time.
Published: May 10, 2002
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